Do You Have to File a Tax Return for a Dormant Company?

What does Dormant for Corporation Tax mean?

The term Dormant is used by both HMRC and Companies House and refers to a Company or Organisation that is not active, trading or carrying on business activity.

HMRC views a Company as Dormant for Corporation Tax Purposes when it meets certain conditions including:

  • a new company that’s not yet trading;
  • an ‘off-the-shelf’ or ‘shell’ company held by a company formation agent intending to sell it on;
  • a company that will never be trading because it has been formed to own an asset such as land or intellectual property;
  • an existing company that has been – but is not currently – trading;
  • a company that’s no longer trading and destined to be removed from the Companies Register.

If you have formed a Limited Company but not engaged in any business activities or trading and undertaken some initial pre-trading activities, then your Company may still be considered Dormant.

What are Dormant Company Pre Trading Activities?

There are certain Pre Trading Activities or expenditure you can engage in which still allow your Company to qualify as Dormant for HMRC Corporation Tax purposes, allowing you to avoid filing a Tax Return.  These include:

  • preliminary activities such as writing a business plan or negotiating contracts;
  • preliminary expenditure such as incurring costs with a view to deciding whether to start a business.